Mobile Revenues Account for More Than 50% of the Global Games Market as It Reaches $137.9 Billion in 2018

Today, Newzoo released the latest quarterly update of its Global Games Market Report service. We forecast that 2.3 billion gamers across the globe will spend $137.9 billion on games in 2018. This represents an increase of +13.3% from the year before, or $16.2 billion. Digital game revenues will take 91% of the global market with $125.3 billion.

Mobile gaming will continue to be the largest segment following 10 years of double-digit growth since the first iPhone was launched in 2007. In total, mobile revenues will grow +25.5% year on year to reach $70.3 billion. This means that for the first time, more than half of all game revenues will come from the mobile segment. Smartphones will account for 80% of this, or $56.4 billion, with the remaining 20% coming from tablets. Console gaming is the second-largest segment generating $34.6 billion in 2018, while PC games will bring in $32.9 billion.

The Games Market Is on Track for a Decade of Double-Digit Growth

In our latest update, we also present our forecasts for the global games market toward 2021. We expect that consumer spend on games will grow to $180.1 billion by 2021, a CAGR of +10.3% between 2017 and 2021.

Considering that global games market revenues were $70.6 billion in 2012, this puts the 10-year CAGR for the market (2012-2021) at +11.0%. Maintaining a double-digit growth rate for 10 years is truly remarkable; it would be an accomplishment for a single company, let alone an industry that has been around for multiple decades.

Mobile Gaming to Be a 100-Billion-Dollar Market by 2021

In the span of a decade, mobile gaming will have grown from the smallest segment in 2012 to a 100-billion-dollar industry in 2021. Remarkably, the rise of mobile gaming has not significantly cannibalized revenues from PC or console gaming markets. In the coming years, mobile game revenue growth will continue to outpace the overall games market, growing to $106.4 billion in 2021. By then, smartphone and tablet games combined will generate 59% of revenues in the entire market.

“In the span of a decade, mobile gaming will have grown from the smallest segment in 2012 to a 100-billion-dollar industry in 2021”.

Both PC and console games have shown steady growth over the past few years. This year, console will generate $34.6 billion and capture 25% of the market. PC gaming will generate $32.9 billion, making it is the smallest gaming segment with a 24% market share.

The Future Also Looks Bright for PC and Console

Downloaded/boxed PC games will grow with a CAGR of +4.2% from 2017 to 2021, generating $32.3 billion in 2021. While we expect engagement with PC games to continue to grow, driven by competitive play and esports, this will only partially translate to higher revenues for several reasons. Most importantly, we believe that some of the most popular titles are already operating at close to their full monetization potential and, at the same time, are unlikely to be displaced by new games soon. In addition, average prices for pay-to-play PC games have been declining in recent years, putting downward pressure on the segment’s overall revenue growth. The total PC gaming market will grow at a CAGR of +1.8% between 2017 and 2021 as the continued shift from browser PC to mobile games cuts revenues from the browser segment in half between 2017 and 2021.

“While we expect engagement with PC games to continue to grow, driven by competitive play and esports, this will only partially translate to higher revenues”.

We also see further room for growth in the console segment if publishers continue to improve in-game spending options while retaining the upfront price point. Furthermore, live streaming and esports will be fully embraced by the console segment by 2021, further driving player engagement. We forecast the console segment to grow to $39.0 billion in 2021 with a CAGR of +4.1%.

Japanese Gamers Spend the Most, making it the #3 Country Globally

The Japanese gaming market will still be the third-largest in the world in 2018 (behind the United States and China), growing +15.1% year on year to $19.2 billion. Due to the continued success of mobile gaming companies in Japan, we increased our estimate for Japan’s mobile games market for the second time in a year. This means its mobile games market is now nearly the same size as North America’s with roughly one-third of the number of gamers. In fact, Japanese gamers spend most of any country, particularly for mobile games. The average spend per payer in Japan is 1.5 times higher than in North America, and more than 2.5 times higher than in Western Europe.

China alone will account for more than one-quarter of all global game revenues, reaching $37.9 billion this year. It will remain the number one gaming market by revenues and by number of players. Mobile is the dominant force and will generate 61% of revenues in 2018, growing to 70% of the market by 2021.

In total, the APAC territories will generate $71.4 billion, or 52% of total global game revenues. This represents a +17.0% year-on-year increase, nearly all of which is attributable to mobile; the segment will grow $9.7 billion year on year to $44.7 billion in 2018. The APAC territories are a primary driver of continued growth for the global games industry, as the number of smartphone users in emerging markets such as India and Southeast Asia grows exponentially and, at the same time, the willingness to spend on mobile games grows in more established markets like China and Japan.

North America is the second-largest region, with estimated revenues of $32.7 billion in 2018, a year-on-year increase of +10.0%. Most of this growth will come from smartphone gaming and, to a lesser extent, console gaming. We see the same trends in EMEA, which we expect to reach $28.7 billion in 2018. In European countries, mobile gamers are less willing to spend than Americans, with the average spend per payer in North America 1.6 times as high as in Europe. However, this is offset by the steadily growing smartphone population in the Middle East and Africa. Latin American game revenues will grow to $5.0 billion this year.

Global Games Market Forecasting Methodology

Newzoo’s Global Games Market Forecast Model projects gamer numbers and revenues per segment and region on a global, regional, and country level. It also shows the share of paying gamers and average spend at the same level of granularity. These projections are analyzed in multiple ways, comparing year-on-year growth rates, market share, CAGRs, and absolute amounts in USD between the regions and segments, as well as the development of specific regions or segments in time. Projections are compared to available third-party sources on a local or global level. Given the pace of the developments in the games industry, Newzoo reviews its conclusions and assumptions every quarter, considering newly available data and insights. Before publication of any data, Newzoo also performs various validation checks, including comparison against historical internal data, comparison against market figures from alternative sources, and validation from several Newzoo clients.

Newzoo’s Global Games Market Report is a subscription service that includes quarterly trend and forecasting update reports as well as continuous access to a dashboard with gamer and game revenue forecasts by country and segment. The service is subscribed to by the majority of the world’s leading games, media, hardware, and entertainment companies.

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